Critical Review: Valero Energy Partners (VLP) vs. EnLink Midstream (ENLC)
Valero Energy Partners (NYSE: VLP) and EnLink Midstream (NYSE:ENLC) are both mid-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.
Volatility and Risk
Valero Energy Partners has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500. Comparatively, EnLink Midstream has a beta of 2.62, indicating that its stock price is 162% more volatile than the S&P 500.
This is a summary of recent recommendations for Valero Energy Partners and EnLink Midstream, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Valero Energy Partners||0||1||6||0||2.86|
Valero Energy Partners presently has a consensus target price of $53.43, suggesting a potential upside of 25.42%. EnLink Midstream has a consensus target price of $18.33, suggesting a potential upside of 4.17%. Given Valero Energy Partners’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Valero Energy Partners is more favorable than EnLink Midstream.
This table compares Valero Energy Partners and EnLink Midstream’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Valero Energy Partners||55.29%||266.53%||22.74%|
Valero Energy Partners pays an annual dividend of $1.82 per share and has a dividend yield of 4.3%. EnLink Midstream pays an annual dividend of $1.02 per share and has a dividend yield of 5.8%. Valero Energy Partners pays out 61.7% of its earnings in the form of a dividend. Valero Energy Partners has increased its dividend for 2 consecutive years and EnLink Midstream has increased its dividend for 2 consecutive years.
Earnings & Valuation
This table compares Valero Energy Partners and EnLink Midstream’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Valero Energy Partners||$412.55 million||7.04||$298.24 million||$2.95||14.44|
|EnLink Midstream||$4.92 billion||0.65||$751.90 million||N/A||N/A|
EnLink Midstream has higher revenue and earnings than Valero Energy Partners.
Institutional and Insider Ownership
29.9% of Valero Energy Partners shares are held by institutional investors. Comparatively, 34.8% of EnLink Midstream shares are held by institutional investors. 1.2% of EnLink Midstream shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
About Valero Energy Partners
Valero Energy Partners LP owns, operates, develops and acquires crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets. The Company’s assets include crude oil and refined petroleum products pipelines, terminals, and other logistics assets in the United States Gulf Coast and the United States Mid-Continent regions that are integral to the operations of the ten of Valero Energy Corporation (Valero) refineries. It provides assets and services, such as Port Arthur logistics system, McKee logistics system, Memphis logistics system, Three Rivers logistics system, Ardmore logistics system, Houston logistics system, St. Charles logistics system, Corpus Christi logistics system and Meraux logistics system. Port Arthur logistics system includes its Lucas crude system and its Port Arthur products system. McKee logistics system is a crude oil and refined petroleum products pipeline and terminal system supporting Valero’s McKee Refinery.
About EnLink Midstream
EnLink Midstream, LLC is an integrated midstream company. The Company’s assets consist of equity interests in EnLink Midstream Partners, LP (the Partnership) and EnLink Oklahoma Gas Processing, LP (EnLink Oklahoma T.O.). The Partnership is engaged in the gathering, transmission, processing and marketing of natural gas and natural gas liquids (NGLs), condensate and crude oil, as well as providing crude oil, condensate and brine services to producers. EnLink Oklahoma T.O., a partnership owned by the Partnership and the Company, is engaged in the gathering and processing of natural gas. The Partnership’s segments include Texas, Oklahoma, Louisiana, Crude and Condensate, and Corporate. The Partnership connects the wells of producers in its market areas to its gathering systems, processes natural gas to remove NGLs, fractionates NGLs into purity products and markets those products for a fee, transports natural gas and provides natural gas to a range of markets.
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